Ullrich Printing Inc. paid out $21,750 of common dividends during the year. It ended the year with $187,500 of retained earnings versus the prior year's retained earnings of $132,250. How much net income did the firm earn during the year

The options are :

$77,000 $80,850 $84,893 $89,137 $93,594

The correct option is the first one ,$77,000

Explanation:

The net income can be ascertained using the ending retained earnings formula provided thus:

ending retained earnings=beginning retained earnings+net income-dividends

ending retained earnings is $187,500

beginning retained earnings is $132,250

dividends paid during the year was $21,750

By changing the subject of the formula,net income formula is derived:

net income=ending retained earnings-beginning retained earnings+dividends

net income=$187,500-$132,250+$21,750=$ 77,000.00  

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